E&S Underwriters Are Putting Their Faith in Fac Reinsurance
While recently attending the National Association of Surplus Lines Offices (NAPSLO) annual convention in San Diego, I was asked for my views on the property facultative market in the context of the E&S sector.
This is an interesting time for fac reinsurers because E&S carriers are retaining more risk, net and treaty. While it seems counterintuitive, this trend actually keeps us busy in property fac. That’s because many clients use fac coverage to protect their recently increased net retentions and to smooth volatility.
Also, as the general market becomes more aggressive, many clients have been forced to expand their risk appetites to compete. Given the pricing pressure that exists, it means risk selection is even more important.
Underwriters and underwriting managers wanting to grow into new territories, or looking at occupancies they haven't considered in the past, can use fac to get a better understanding of the market before going in more aggressively. We're finding opportunities to work with clients and help them expand their business, while making sure it's done prudently.
The E&S world appreciates efficiency of transaction as well as the ability to create reports. We created Gen Re Connect to allow for immediate quotes while still allowing access to underwriting expertise. Speed often wins the deal, so combining the two elements is critical to competing more effectively.
A.M. Best’s annual review of the E&S market revealed how the segment continues to grow. We see the fac product as a great fit because its flexibility naturally aligns with the free rate and form that is the hallmark of E&S.
Also, the underwriting expertise and the broad perspective that facultative reinsurers can share are often valuable here. The ability to have underwriter-to-underwriter conversations adds an extra layer of comfort for underwriting managers, while thinking through proper exclusions or terms and conditions can make the difference between getting a deal or not.